Monday, April 6, 2009

Bad News/Good News

In the body politic there is bad news and good:
The bad news, as Robert Reich declared last week (underlining what many of us had already concluded), is that we are now in a “Depression” which will likely worsen in the immediate future. The good news is that we’ve got a president who combines warmth, wit, intelligence, and compassion and who is committed to changing the status quo. The up-side of all this is that this crises provides the impetus to establish a saner economic system to curb cut-throat capitalism, lower the gap between the super-rich and ordinary people and provide better social safety nets (including universal health care, and “green” legislation that can slow down the toxicity that is poisoning us all).

These same contradictions and opportunities apply to the business of books. The news here is incredibly bad, and worsened by the fact that there is no president who can reform this system—just a lot of large corporate publishers facing declining sales who are scrambling to avoid massive red-ink by laying off workers, putting moratoriums on acquisitions, and closing imprints. Last week Publishers Weekly, in an effort to help so many senior people who’ve been pink-slipped, added to their daily on-line edition, a free listing of those suddenly out-of-work and a way to contact them if openings developed elsewhere. Yet conversations with Rudy Shur at Square One, Dan Simon at Seven Stories Press and other publishers/editors make it clear that there is no new hiring going on.

General Motors made a case that if they disappeared, so would tens of thousands of others, like suppliers and dealerships. As large publishers continue to shrink, so do opportunities for their suppliers: new and mid-list writers (who find it extremely difficult to find their way into print) and literary agents, who repeatedly tell me how their business has fallen off because of unprecedented difficulties in finding spots for the writers they represent. Adding to this toxicity is the disappearance of newspapers and the drastic reduction of book review space.

The good news is that this collapse will necessarily change the paradigm of how the written word becomes a book and how these books become marketed. Clearly CEO’s of most major publishing companies did not anticipate these circumstances and the personal heartbreak that has followed. To expect change from above is the same as expecting executives at AIG or GM to reform the banking or automotive industry. As I see it, the operative term for viability and change in our business would be one coined in the 60’s: “Small is Beautiful.” And I believe that is already happening.

I take it as good news that the chain bookstores are in serious trouble. Decades back, neighborhood bookstores accounted for more than three quarters of book sales while employing people who enjoyed reading and could recommend titles to customers. The chains totally reversed these percentages by their own rapacious practices: buying in larger quantities while demanding bigger discount from publishers, charging publishers for display space, and offering steeper discounts to customers. Using their profits to open ever more stores, they drove countless independents out of business. In effect, like Citibank, Chase, and others in the banking system, the Daltons, Borders, Waldenbooks, and Barnes & Nobles (who even started competing with publishers by publishing their own titles that they would sell exclusively in their stores) came to dominate retail sales, while selling publishers on the idea that they were too big to ignore. But without dedicated staff who read and hand-sold, it did little to help bring new writers to the attention of readers. “Too big to fail” is the mantra of collapsing banks in seeking bailouts. But bailouts are unknown in the publishing industry. And, in truth, when entities become too big, as the chains have become, they become de facto monopolies. So let us rejoice in the troubles at the chains and welcome back the neighborhood book store.

Offsetting the bad news of disappearing newspaper reviews is the good news concerning the incredible proliferation of online and blog review sites. Books sell, essentially, by virtue of word-of-mouth. The question has always been, in this nation of 300 million people, "How do potential readers first discover a book?" Clearly, reaching pockets of readers around the country is much more likely through blog reviewers than getting a review in any big city newspaper, which only attract a local audience at best (and a limited one, too, since only a minority of newspaper readers actually read book reviews: another reason why papers are cutting down on them). The only national newspaper that still has a separate book review section is The New York Times, but their shrinking Sunday book section typically restricts themselves to 5 fiction reviews and 10 non-fiction reviews—hardly a way of spreading much word-of-mouth for relatively unknown novelists. Therefore bloggers and online reviewers, who have far less interest in celebrity authors and books about celebrities, far more interest in discovering new talent than repeating coverage of old talent, and who seem at least as interested in fiction as non-fiction, are a welcome transformation.

All of the bad news for conglomerate publishing should spell good news for small publishers who are sent more and better manuscripts from authors and agents and who can gain far better access to reviews because of the internet. I know that despite all the gloom and doom, our good news is that sales of our fiction were higher in 2008 than they were in 2007, and that this year—with the publication and fine pre-pub and widespread online reviews of Efrem Sigel’s The Disappearance, Daniel Klein’s The History of Now, and Ivan Goldman’s The Barfighter—they have started off significantly higher than our 2008 sales. And, being small, we have not had to lay off any staff. The bad news is that sub-rights income has declined significantly, for there is no market for selling paperback rights in the United States and a declining market for translation rights sales abroad, since large European and Asian publishers are having the same economic problems as the major American publishers. But, overall, this is something we can live with far better than the Monsters of the Midway.

Years ago I came to realize that the corporate publishing practice of tossing out several hundred titles a year and hoping that some of them will stick to the wall was not a sound business model. Economically speaking, it's far more effective to put out a dozen or so books annually while paying attention to promoting each and every one, for it requires less staff and office overhead, allows the selections to be more focused and refined, and offers greater protection against the vicissitudes of the larger economy and the marketplace. Given the current climate, I would say that the concept of "Small is Beautiful" provides a better template for the future of book publishing than the one currently in place.

Part Two to follow in my next blog posting. Other news on our website



  1. Your finest column to date, Mr. Shepard-- try and figure.

    Danny Klein

  2. Well-said Martin! Rigler, the CEO of Vanguard Money-Market fund, warned a couple of years ago about unrestrained capitalism and the damage it was doing to the economy.

    The book industry is a microcosm of the American, indeed the world's, economy.

    Thank you for your optimism, which is not as cock-eyed as you might think. My only hope is that some new independent bookstores can spring up around the country.

    When I travel, I make it a point to visit as many independents as I can. I always spend as much as I can, and I write about them on my blog.


  3. Marty:
    A salient column to say the least. No one could have seen the shift coming with regard to newspaper failures, book stores closing, and publishers having to cut back.

    The upside that I see is a new era emerging where we have more writers who are learning their craft and developing an audience which is totally different than the one of years past. Blogs,Kindles, and the like are changing the way many people find what it is they like to read. Downside, well these cut out another market of the written word, but at least some of the 300 million of the US are still reading!

    I broke into the review column concept a little over a year ago. By scrambling around I found unique niches where I could have the column published. With a circulation of about 675,000 at this time I find that much of it is on line! People are reading the reviews, authors are putting them on their websites, and me? Well, there is no money in this business for a reviewer. The pittance received from some of the places which publish them is enough to keep me in a bottle of gin once a month, cheap gin at that!

    One of the newspapers that I write for is very apologetic about the fact they no longer can pay for content in their paper! Well, I get a free paper,a monthly lunch with the editor, and great conversation when we meet. Good thing that I do not have to rely upon the media to make a living.

    Your comments are salient, meaningful, and I look forward to your follow up.


  4. Marty--
    These payments for shelf space would be labeled kickbacks in most other industries. Few customers understand that chainstores don't even attempt to evaluate their books as books when they plot displays. They could just as well be putting out socket wrenches. The fact that your firm's novels are getting good reviews in trade publications but are still ignored by chains tells us plenty about those chains. Those of us who love books have probably all seen instances when a terrific independent bookstore was driven to its knees by a chain that opened an outlet next door and staffed it with people who don't know a book from a barbie doll. A civilized country supports the arts and people's welfare. Ours supports F-22s and credit default swaps.

  5. Excellent take and could not agree more regarding our president. I could not imagine how darks things would seem with Bush at the helm in these times.

    I believe the traditional paradigm of small or large brick and mortar booksellers has been eroding for some time. As the earlier writer suggests kindles, online reading, podcasts all will continue to reduce the printed word market.

    The market is changing. Adaptation is key.

  6. Thanks. A great article, and lots of things that I'd not really thought about. I guess we live in "interesting" times.

  7. Marty,
    This was an outstanding article. Your ability to define the issues facing all facets of the publishing industry was phenomenal.

    I am a proponent of the little guy!! Indie Bookstores are so much more fun to shop in anyway,IMHO. Perhaps it is because when you walk in my senses are acutely aware that the new book smell means a novel adventure. (Excuse the pun.) The displays are just so visually crisp and fresh, it's better than gazing on bouquets of flowers. They are always new, ever changing and the variety is endless. The stillness of the small bookstore in contrast to the buzz of Borders is a bibliophiles haven.

    Small is beautiful, but it takes some people a lot longer to understand that. I know that it took many, many years to realize a short stature is a beautiful thing.

    Great topic in today's climate.

    I will be shopping at my local Indie bookstore on May 1st to support Indie Day.

    Wisteria (under 5') ;)

  8. A very interesting column. I tweeted it. Maybe it's just too soon, but I don't see a rise of small independent bookstores opening up to take advantage of the hard times the chains have fallen on. Seems it's hard times for all. I don't really see a sea change out there.

    I wish independents well. I know I miss mine.